Telkom launches mobile video, music streaming services

JOHANNESBURG (Reuters) - Telkom TKGJ.J will offer customers on-demand video streaming and music from September, part of plans by South Africa's biggest landline provider to try to increase revenues and subscriber numbers in its mobile business.

A shopper walks past a Telkom shop at a mall in Johannesburg February 26, 2016. REUTERS/Siphiwe Sibeko

Telkom, 39 percent owned by the government, is introducing the new products in a rapidly changing market where rival mobile network operators are all competing to attract customers and maximize profits.

Telkom is one of five main major companies that dominate South Africa's wireless broadband market, including MTN MTNJ.J and Vodacom VODJ.J, which controls about 70 percent of the market.

Telkom Consumer Chief Executive Attila Vitai, speaking on the sidelines of the new product launch, said the company expects the new service to boost its mobile revenue as new customers upgrade their data packages to access the service.

“This will act as a market stimulus and we’ll get more and more customers to FreeMe just to get this service. So we think our revenues will rise as a consequence of this,” Vitai said, without giving an estimate revenue figure.

Telkom overhauled its mobile product in 2016 and introduced data mobile packages called FreeMe to boost its mobile business, which contributed to core profit for the first time last year.

Telkom LIT, launched on Thursday, will provide its FreeMe customers on a 2 Gigabyte and higher packages the ability to stream movies, television, videos and music on demand at no extra data cost.

The company said it had partnered with Naspers' NPNJn.J Showmax, Netflix NFLX.O, YouTube and Google Play GOOGL.O for LIT Video and Google Play Music, Apple Music AAPL.O and Simfy Africa for LIT Music. It will also launch LIT TV.

The company completed the turnaround phase of its strategy in 2016 that included cutting jobs, outsourcing services such as telephone directory printing and selling some properties.

It is now focusing on growth and looking to boost its mobile business, launched in 2010, to offset the falling use of landlines.

Responding to a question on the government’s plan to sell its Telkom stake, Vitai said Telkom “will accept it and work with them if they decide to sell to a third party.”

South Africa is considering selling its stake in Telkom to fund a 10 billion rand ($757 million) bailout of South African Airways.

Reporting by Nqobile Dludla. Editing by Jane Merriman